BB seeks finance ministry’s opinion over steel makers’ plea

The central bank has sought the finance ministry’s opinion whether steel manufacturers will be given extra time for loan repayments or not.

Bangladesh Bank (BB) believes that if the special facility is given to a particular sector, other sectors may demand the same and consequently, the banking industry may face a chaos in loan discipline, said the BB letter sent to the senior secretary of the Finance Division on February 28.

Earlier on January 19 this year, the Bangladesh Steel Manufacturers Association (BSMA) in a letter to the central bank, demanded extend repayments of the existing term-loans up to 10 years and convert 30 percent of working capital into term loans.

The BSMA said the sector had been badly affected by the coronavirus pandemic since March last year, so it needs this loan repayment facility.

In reply, the BB said considering the impacts of the Covid-19 pandemic it had given one year moratorium till December 2020 on repayments of all loans. Under this rule, no loan was made classified.

Also, a Tk 30,000 crore stimulus package has been made to provide working capital to the affected industries so that they can run their operations. A monitoring committee is there to take care of the complaints about getting loans under the package, BB letter said.

The central bank also said a lender can reschedule loans based on bank-customer relationship and extend the loan repayment period, maximum by 2 years as per a BB circular issued in January this year.

So, the BB thinks if a long-term loan repayment facility is given to a single sector, other sectors may also demand it. However, it said earlier such a facility was given to jute and shipping industries, but it did not mention when it was given.

Last but not the least, the central bank told the finance ministry to consider financial losses of banks if such benefits are given.

“Bangladesh Bank will act on the instruction of the finance ministry in this regard,” said a BB official.